Publication: Effective Discipline with Adequate Autonomy : The Direction for Further Reform of China's SOE Dividend Policy
Date
2009-11
ISSN
Published
2009-11
Author(s)
Zhang, Chunlin
Wang, Lihong
Abstract
This note explores the desirable
direction for further reform of China's state-owned
enterprise (SOE) dividend policy. This study represents an
effort in exploring the desirable direction for further
reform. It is an extension of the previous World Bank
studies (World Bank, 2005, 2007) on this subject. It argues
that a sound dividend policy must generate effective
discipline against insiders and leave adequate managerial
autonomy to them in the meantime. Considering China's
current situation in light of relevant international
experience, this study recommends three actions for the
government to take to deepen the reform. The first is to
raise the flexibility of SOE dividend ratio by adding a
dividend ratio determination mechanism to the existing
system of state ownership function. The second involves
government monitoring and adjustment of the average dividend
ratio of all central SOEs. The third is to start integrating
state capital management budget (SCMB) with the general
budget. The rest of the note is organized as follows.
Section two discusses the nature of the issue and the
criteria that a sound dividend policy must meet. Section
three-five reviews payout practices of private sector firms
(mainly publicly held companies but also include privately
held firms), non-Chinese SOEs, and Hong Kong listed Chinese
SOEs. Section six presents recommendations regarding the
direction for further reform.
Link to Data Set
Citation
“Zhang, Chunlin; Wang, Lihong. 2009. Effective Discipline with Adequate Autonomy : The Direction for Further Reform of China's SOE Dividend Policy. © World Bank, Washington, DC. http://hdl.handle.net/10986/18902 License: CC BY 3.0 IGO.”